May 11, 2022

1. Roland Mansilla, Safely Finance - Financing for Moving

Roland Mansilla


Co-Founder, COO


Safely Finance

My guest today is Roland Mansilla, Co-Founder and COO of Safely Finance. Safely Finance works with renters and property managers to help finance the costs of moving and renting. We discuss how financing is a win-win for renters and property managers, why Safely Finance took the hard path of becoming a lender rather than pursuing a buy now pay later model, and what it means to be a renter-first company. Please enjoy this conversation with Roland Mansilla.

Jared Klee: Hey, Roland. Thanks for joining me today. If we roll back the clock Safely Finance, it was originally Safely Deposit. You guys had a product in market, you had customers, and then you decided actually, you know what? We have a better plan. We have something else we could offer the market.

There was a pivot. That's a big shift for any company. Let's start with, how did you make that decision? How did you come to it? And then how did you and your co-founder set you on your new path?

Roland Mansilla: It's a great question cause it's kind of the genesis of the story for where we are now. You mentioned conversations with investors. And I think for us maybe it goes without saying, but there's been no higher value add investor that we've had other than Y Combinator.

At the very beginning, they're the ones that kind of set us up, got us going meeting with our partners regularly through YC to put the business in the direction it needed to be got us from zero to one was Safely Deposit, as you mentioned, what we were called before the pivot. Unfortunately, when we were starting to build this business, it was also the early days, not just of a new company, of COVID.

So we quickly run into a situation where with our old product, we were creating this Uber like experience security basically where you could take high objects, high value objects out of your house and bring them to a bank vault in an armored vehicle. We essentially had to stop that because you can't do hand-to-hand transactions, bank vaults, and branches close.

We go back to the drawing board. And specifically at the time there was a partner at Y Combinator named Aaron Harris who's a very, very sharp guy knows a lot about FinTech. He looks at me and Jason and says, you guys just came out of Lending Club. What insights do you have that nobody else has? Because that's going to be a founder market fit for you.

Jared Klee: But now you still have the Safely Deposit customers to go engage, people whose stuff is stored in secure vaults. You have investors to go engage. There's a process before you can totally pivot.

Roland Mansilla: For founders who find themselves in that position, if they did the work early on to get the right folks into the cap table. They were mindful about the investors that they surround themselves with, the customers they work with in the early days of the product. It can be easier rather than harder, but there still are some sort of uphill moments you face.

A huge shout out to our CEO, my co-founder Jason, who worked with our cap table. We have some incredible folks who came in to fund us, like you said, right after Y Combinator, right? The early days of getting the business going, part of that is having capital to deliver on the roadmap, the plan, the marketing and quickly getting them onboard to understand that we just came out of a business that was funding, I think at the time we were reviewing like 14 million applications a year in small credit, personal loans at lending club. We'd built software across operations, customer experience, other credit products that we were really in a position where we were fully in control of the pivot as opposed to just of kinda throwing darts at a dartboard and seeing if we could hit a bullseye.

On the customer side, the interesting thing is you're right, people trust you especially in the business, we were running to take some of their most valuable objects, heirloom objects, copies of people's last will and testament, trust documents, et cetera. And take those essentially into a situation where we benefited, if such a thing that benefit from the pandemic, where there was at least a reason they understood.

We could go to those customers and say, hey, this bank vault at this branch this part of California is not going to be open. We don't know if it's going to be open for six months for 12 months. We just don't have visibility. Can we return this item to you. Uniformly folks understood. They said, yes, I would prefer to have this in a vault, somewhere.

We'd say, that's great, we'll send you a guide that we built about what home safes are okay options. It won't be the same as a banker involved, but we did everything we could to get folks their items back. And they were able to understand, because the unique situation we were in.

Jared Klee: I love that. And it doubles down on that trust you'd established so early on, even as you're pivoting, you're continuing to deliver on that trust.

Roland Mansilla: It's all about trust, a hundred percent. I mean, there's the soft skills that come into this. You take two guys who worked in FinTech and were firmly on the tech side. But you really have to not overlook the soft skills of business development, not just in the sense of sales, but customer service. I think underlining that is super important.

Jared Klee: That's clearly prerequisite to the strong business you're now building with renters, with Safely Finance. So as you're pivoting, you're going from a space where yes, you're in financial services, but it's not quite the same regulated environment as lending is. Help me understand how you guys started to get your bearings on what it means to operate there and then going through the motions of the appropriate licensing, engaging regulators and the lot.

Roland Mansilla: A friend, Tom Meister, who likes to use a phrase that essentially regulators and governments make markets. And I think that couldn't be truer because you have this rise of BNPL that has happened in the past couple of years, that effectively has gotten by on a loophole where, they're not pulling credit reports and this is kind of the secret sauce, so they get around a regulation where they're not exactly deemed to be a traditional or even a loan or a credit product, right.

They can make a pay in four, pay in three, or a pay in whatever without pulling a credit report, without reporting back to the Bureau's, without falling into that regulatory regime that all of their lenders face.

Now with our company, you have two guys who are coming out of a large personal lending business. And before that for myself a small and medium sized business SMB lender mostly working on franchises and working capital and Funding Circle. So I'm deeply familiar with what needs to get done, to stay safe with regulators, even in a changing environment. I mean, there were teams, both at Lending Club and Funding Circle that on the public policy side helped actually Write some of the legislation that later got passed and put through the CFPB to make sure folks do things the right way.

So a little bit of a windup, but in that playing field, you actually have us at Safely where we're doing a traditional credit product in the most renter friendly way. We are reporting to credit bureaus. So we do have to take into consideration the FCRA. We are working with credit pulls and with you know, from offers of credit and pre-qualification, so we have to work with the FTC, the equal credit opportunity act, reg B. Sort of the landscape that you need to have a professional thumb on to really operate cleanly in lending.

And I think that actually helps us stand out because we're kind of ahead of changes that may or may not come soon, especially if the current uh sort of way things are in Washington, where the CFPB might be coming down on this.

Jared Klee: Before we double click on the changing regulatory landscape. What is Safely Finance today? You're not buy now pay later. You're pulling credit. You're extending loans in a traditional sense, but I get the sense that there's not a lot of other people in the market helping renters move.

What is Safely Finance?

Roland Mansilla: We're a financial amenity that helps make moving and rentals more rewarding and easier. We like to say move now pay later, but when we're not working in the BNPs loopholes, we are essentially personal loans that folks can repay in either six or 12 months, where the funds go directly to the property.

So when you're moving in and you have a deposit, that gets replaced. If you have a pet fee, it makes it easier. But you can also take out additional funds. Say if you're renting a moving van or getting moving supplies, or if the move out from your last lease requires that you actually hire a cleaning company to help clean out the unit before you turn over into a new apartment. All that gets covered. It's one payment. Just makes life a lot easier.

Jared Klee: Are renter's going through you? Are they going through the property manager or the equivalent to obtain the loan.

Roland Mansilla: So they come through a process where they still go through a tour, right. They might do an online tour. If it's a more up-to-date property manager that of is in a larger group where they can afford a solution that helps them build either online 3d versions of their units or take videos in a walkthrough digitally.

Or they might do a traditional tour with an actual leasing agent. It's usually at this point that Safely Finance comes into the picture and we're introduced in a way that is essentially a payment tool.

So, hey Jared, you're looking to rent this amazing apartment and this really hip area, Brooklyn, it's going to cost you probably five to 10 grand to get into here with first, last month's, rent deposit, pet fee, your moving costs. By the way, we have this partner, we work with Safely Finance, who will give you a loan for all this so it's $0 up front. And you, if you have great credit, could potentially qualify for a 0% APR. Kind of like the way the firm does this with Peloton.

Jared Klee: So they're as much a partner for you as they are, frankly, a distribution channel into potential renters and the like.

Roland Mansilla: Exactly. We love the partners we work with in real estate. There are folks who would in this day and age, when so many companies are tech enabled, whether it's FinTech, healthcare, tech, whatever. I feel that real estate is still an industry that sometimes can feel very intimate. You gotta know the local landscape well, you have to know your competition.

If you're building a Class A or B property in a certain part of like Boulder, for example, or Denver, you need to know who else is in the area and what other options there are for new folks moving in that want to rent. So in this way, having a partner who really understands what it is that their customers are looking for helps us really deliver a great white glove customer service, not just to them as a partner using our amenity, but also sort of a B2B2C job where we're also serving their end users and the tenants.

Jared Klee: What's driving the decision for a property manager to work with Safely Finance. If you live in New York right now, it's a property managers market.

Roland Mansilla: Yep. I think the change will eventually hit all markets. When the industry matures financial entities like ours and others become the standard. There's a regulatory change that's happening in some places. For example, I think are laws passed in Atlanta, local, cause a lot of local, sort of sidebar, but a lot of local legislation drives what can happen with deposits and landlords in the properties, whether it's single family or multifamily units.

But in places like Cincinnati and Atlanta and at other locations, Maryland, there's actually been local either AG rulings or laws that have been passed that say landlords need to offer alternatives instead of just collecting the traditional deposit. So there's a government force there.

But secondly, there's that competitive and marketing force. Right? If you're in a place like Austin, Texas that has had like a boom and increase, it's not just catching the eyes of new build developers, but also folks who have run apartment buildings there maybe for the last decade and they need to stay relevant.

They're looking for essentially what we'd like to call the financial amenity, something that's a little extra, a little bonus. And for us, it's the additional items we work with that kind of seal the deal. We're not just here for moving, but with a landlord or a property manager, we're a partner at move out where if for example, they have a high turnover a building, you know, maybe they serve a lot of folks in professional services that need to move around frequently. That person, that tenant, breaks their lease early, they might have a lease break fee. And that penalty is something that could also be financed where the building gets paid up front.

And that's an important thing to underline, right? No matter whether we're at the beginning of the lease or at the end of the lease, we're giving full cash upfront front to the properties. So they're accelerating their working capital for whatever needs they might have as a business.

Jared Klee: It's a powerful model. Property manager from where they sit, they get the same cash upfront that they would today on any kind of tomorrow fees. They know they've got someone money good sitting on the other side of that. So just from a purely cash basis, that's advantageous. You're expanding the accessibility of housing for renters at a time where I think across the country, we're seeing rent prices go up. People are effectually being price out.

Roland Mansilla: Yep. That's happening. We definitely have a strong mission driven team where we are focused on helping renters across the spectrum. So we're not just working with your class A and class B properties, although we absolutely love those customers. We're also working with folks slightly down market, where they might not have the best resources, either as a landlord or as a leasing team, working with their prospective tenants to be able to run screens for the types of customers that they might interact with on a day-to-day basis.

And for us, we've built our careers in FinTech, where we've had to think creatively about how do we actually drive at the heart of risk and find out really whether or not this is a good credit to make a personal loan. And bringing that over and porting that over to rentals, we're essentially, what we're doing is saying, hey, this person might be fresh out of school. They might not have 10 years of work history, a bank account with six figures in it, and a credit report with 30 trade lines.

But we're actually using a proprietary risk model that'll say, hey, this person actually has, you know, a great job offer lined up or they they studied a certain major and have a certain prospect in the future based on where they're relocating to take a new opportunity. We think they're actually going to be a great credit.

And then having the data behind that to prove that the loss curves aren't going to catch up with us is really what it's all about and serving that end the market, whether we're looking at folks who might live paycheck to paycheck, who may be newer to credit, or who might face some sort of other financial constraint.

Jared Klee: So you've got a real differentiation on the underwriting model itself. Being able to underwrite renters who perhaps most others couldn't. What about the financing side of this?

Roland Mansilla: I love to think about this as sort of a killer payments tool. If I was in charge of growth and sort of marketing and sort of product-y things that a real estate company, I would absolutely love this because Safely Finance also offers other payment tools.

So in the customer flow, when they're applying for Safely Finance, if the customer in any point decides they don't want the credit, they don't want the move now pay later, what do you do?

If you're one of our competitors, you do one or two things. You force the buildings to have all their tenants opt in, and you might do this if you offer like an insurance model or something like this. But in that case, the tenants are effectively paying an annuity. They never get the money back. It's not actually working like a deposit. They're just paying money into the system for insurance. It's like a premium, nobody wants more premiums in their lives. Good luck explaining insurance products to people they're that arcane right. Or sort of obscure.

So I think on the flip side for us, the thing that's really exciting is hey, you know, take out a loan. You're going to understand this. If you don't want. We'll still process a card payment for you. We'll still process any other sort of payment for you. You can still pay the landlord upfront, all the cash, the deposit normal way. There's no barrier for the customer getting all the way through that flow.

So from a PM perspective, sort of product mindset, I absolutely love that because you're removing friction, not just in a way that's for your core feature, which is great because we would make money off of any potential interest on a loan, but truly delivering value to the customer where if that's not what they want still giving them the option to choose something else.

Jared Klee: I dodged the regulatory question before. Both help me understand how you think about that now. And then you've clearly got deep insight into where this world is going. How are you planning for the inevitable changing regulation? CFPB is becoming much more active for instance.

Roland Mansilla: We're very much a value driven business. We aim to always have the highest integrity in all that we do and that that usually keeps us in a category that I think might be somewhat rare for financial services, but clear of sort of the hurdles that others might focus. We kind of have a clear lane ahead of us.

Because we've been through the rodeo before, it wasn't hard for us, even as a startup or you might have some other companies cutting corners. Just going back to the expert outside councils that we work with folks like Kathy Brighton at Hudson Cook, for example, specialty FinTech firm you know, that really knows the market better than almost anyone else. Getting programs set up for compliance, for marketing, for our operations that are going to be compliant with a heads up view based on what a professional, an attorney's expert take is on where the market is heading.

So making sure that we're not going to get into any sort of gray area. We're kind of staying firmly in the black and white. And I think that's what makes us a little bit better prepared for this. I think in the longterm maybe there's macro things outside of sort of the political side of where changes could be, that we have to look to, you know, where rates are heading in an expansionary global macro economy, what happens when customers can't get the supply they need in the housing market and you have a rush of folks into rentals. Kind of the stuff that you were highlighting earlier.

Jared Klee: If we look at Safely Finance in a year, in five years, where does this expand to? The embedded, we want to keep helping the property managers, keep helping renters with exactly those FinTech things that they're not good at.

Roland Mansilla: Yep. So we are already delivering our product now via an API that was announced earlier this year. We've added credit reporting services as well where we'll be able to report the rent roles of a building to a bureau to be able to help them boost their tenants credit by showing the on-time payments.

The monthly rent that you pay as a renter is usually for almost all folks, the largest monthly expense they have. They're making it on time every single month. You know, you don't need to be sort of a bayesian statistician to know that the priors they're getting stronger, they're making on-time payments. They should get some credit for that pattern, right? So it's things like that that are gonna take us deeper into showing how much we care about the renters and making that easier and easier for their life.

We have aspirations to eventually be sort of the digital wallet for renters. You'd be able to port your identity over from essentially working in, or living in one sort of area community to another. We're working on a product with some customers, for example, where if you live in one of their communities in Los Angeles, but life changes take you to New York, if they have an apartment there, you can already be pre-qualified and have your move be all set up for you. You'll have a moving services as more of a platform taken care of along the way as well. So, you know, getting you either services like a van line, or actually renting a truck if you prefer to move yourself. Deals for travel, folks are buying plane tickets or driving to relocate when they move. Sort of the full gambit in making the life of someone who needs to rent or move much more easier and much more rewarding.

Jared Klee: I have to imagine these are among the biggest financial decisions somebody making at that point in their life.

Roland Mansilla: Oh, totally. Yeah. You see it even in the way that verticalized FinTech Is helping folks in certain classes like immigrant populations, for example, where they don't have a credit history at all. Not just that they might have a young credit history within file, but they might be totally new to the financial system of this country and figuring out how to work with those folks understanding folks will have good intent and it'd be potentially good renters and you just need a roof over their head. That's something that, that is going to be huge.

And then even just within traditional pockets of where financial services tends to fall short, right? Customer service around very large transactions is stressful, right? If you're buying a car, you're renting an apartment, you have a heavy medical expense, it doesn't get any easier if the person who's walking you through the billing part of it, you know, it uses language you don't understand or makes it more of a headache than it needs to be. I think we have a big opportunity here and my co-founder Jason and I are really excited about throwing our all at it.

Jared Klee: Is there anyone else tackling this problem?

Roland Mansilla: I think the market opportunity is huge, right? There's 45 to 50 million renters in the U S depending on whose numbers you use, the way you slice it. I think there's another potentially 30 million renters coming into the market if you include the big wave of Gen Z.

So there's a lot of room to play with. And the way that pie gets sliced up today is we will get folks who are building deposit, you know, replacement solutions as a category. And within that, you have sort of like insurance like options, you have surety bond type options, and then you have things that are closer to credit products.

We chose one path as opposed to another. And when we look at it as folks who have rented ourselves and understand what it's like to go through this process, we know that an insurance product probably isn't ideal, right. A monthly premium. Insurance, it's hard to understand. You already have to get renter's insurance anyway, why do I need second insurance? It becomes very complicated very quickly, and it's hard to convert, if you're building a company, hard to convert users. If you're a tenant, it's not ideal because you just don't understand what product you're getting.

It's confusing. You don't like it. It's also more expensive because you're not getting the deposit back at the end of the day. Right. You're just paying this annuity essentially. So we didn't want to do that as folks who understand that as tenants it's important. When folks move, they actually rolled their deposit forward, you know, it's cash that helps them in certain ways, right. They can use that money if they get it back out of the deposit for a major purchase, et cetera.

A surety bond model might get a little bit closer where they, they kind of could call on the funds if they need it. But the fees there might also be expensive. It might not cover the full amount if there is damage to the property. So you might still be on the hook and not have the cash for it.

Can talk about the sort of finance nerd aspect to this all day. But for us, the ideal financial product was essentially a loan. It's a very well-known entity. It's been around since the dawn of time. You can help people build their credit score with it. And it's very simple. You know, I pay for your deposit upfront. You pay me over time because I trust you to be a good borrower. Your landlord is made whole and has all the protection they need. All three parts of the triangle get covered.

There's people, I think focusing on sort of the American dream from like post-World war two forward, like to think of all the services that cropped up around this idea of being a homeowner, which is still a wonderful thing, of course. But you have large brands like Home Depot, for example, that are now facing the reality, that more and more of their potential customer base is renting for longer and longer. They're living with roommates, they have different home needs for home goods and services.

So you think about sort of the strategies that brands like that are going to have to take and adapt to. And it's finding ways that they can plug in with services that make renter's lives easier, as opposed to just continuing to serve up the classics that have worked in the past because the market itself is changing.

So I think that's something else, you know, that we really have to think about as we're designing renter first here. A simple thing even for real estate is we do everything mobile first with our designs. If you're signing a lease, it should be as simple as signing it on your phone, not sending a 30 page packet of a lease back and forth where you have to print it, scan it, sign it with a wet signature, that type of stuff.

We don't need any of that.

Jared Klee: Hiding somewhere behind me is a filing cabinet with many, many, many previous rental leases. If you could help me solve that problem, it'd be very much appreciated.

Roland Mansilla: There ya go. We'll have to, we'll have to resuscitate Safely Deposit at some point and get those stored in a bank vault, but at Safely Finance we definitely have that taken care of.

Jared Klee: I love that vision. That renter first mentality. I think that's a shift for the industry, isn't it.

Roland Mansilla: You know, I think it is. I think there's a lot of very well-intentioned folks in real estate. I think most of the folks who work with have kind hearts really focus on serving up the best potential experience that they can to their tenants. Especially in the sort of larger professional property manager side of things, I think it's just that the processes aren't set up to help everything be a win, right.

A leasing agent also doesn't want to have to deal with all that paperwork. A tenant might get frustrated by it and say, man, my property manager's the worst. Well, you know, they weren't empowered to actually give you a better experience. And I think that having tools that can kind of move a little bit faster or sort of know the best practices from other very close industries like FinTech, like Jason and I coming from LendingClub to where we are now, we can help speed that up, make it easier to remove the friction. I think that's really what's going to be sort of the next couple of years of prop tech innovation in this space. You'll see a lot of folks, essentially just making things a lot easier.

And over time that should help everyone because easier to run properties will make better operating margins, tenants who are happier, kind of want stay in those properties and not churn out. It's a win-win.

Jared Klee: I love what you've built with Safely Finance and love the vision where it's going.

Roland Mansilla: When you own a large property portfolio, we'll have it set up for all your tenants.

Jared Klee: I know my first call.

Roland Mansilla: There ya go. Wonderful.

Jared Klee: Roland my closing question. What's the biggest win you've had. It could be professionally. It could be personal life. Biggest win.

Roland Mansilla: Work is only part of who we are. Just having the gratitude to know that I was able to have the opportunities I have because of the privileges I have, being born into the family, I was born into, being able to go to the schools I was able to go to, where we met at Dartmouth College. That experience and introductory is something that's very special, unique, not everyone has. And I definitely don't take it for granted. That's something, I think that I, I would call sort of the, an incredible stroke of luck and one that I'm very grateful for it.

Jared Klee: Roland. I love it. Thanks for spending time with me today.

Roland Mansilla: Absolutely. Thanks for having me, Jared. This was a lot of fun.

Join 1000+ subscribers to get the inner workings of finance delivered straight to your inbox.